THE HISTORICAL ORIGINS OF CANADA'S NUCLEAR LIABILITY ACT

The nuclear industry is the only one that requires a federal law to protect it from civil liability for off-site damages in the event of an accident. Isn't that peculiar?

Moreover, no insurance company anywhere in the world will insure private property against the consequences of a nuclear accident. If you will take the trouble to check your own insurance policy with a magnifying glass, you will see that it has a "nuclear exclusion clause" in it, saying in effect that your coverage is void in the event of a nuclear accident. Isn't that odd?

Some insurance companies boldly advertize that they will insure anything; and so they will -- anything, that is, except for the radioactive contamination of persons or of property brought about by a nuclear accident. How come?

Indeed, how did this unusual state of affairs come about?
What are the historical roots of the Nuclear Liability Act?

How Did It All Get Started?

In 1953, U.S. President Dwight Eisenhower startled everyone -- including most nuclear scientists -- by announcing his vision of "Atoms for Peace". He talked about turning nuclear swords into plowshares, by turning the power of the atom away from military uses towards peaceful applications. One of those applications would be the production of electricity. But it was still several years before the first commercial power reactor was built. And, by the way, the military uses of nuclear energy just kept right on accelerating; it was not swords INTO ploughshares, but swords AND ploughshares, for the two went hand in hand.

In the meantime, anticipating the commercialization of nuclear power following Eisenhower's speech, the U.S. Atomic Energy Commission ordered a study of the possible consequences of a nuclear accident at a medium-sized (200 MW) nuclear reactor sited near (about 30 miles from) a medium-sized city. The resulting 1957 AEC study, known as the Brookhaven Report, found that property damages could run as high as $7 billion (in 1957 dollars), mostly due to radioactive contamination of land, buildings, food and water. It also documented the thousands of deaths (immediate and delayed) that could be expected from such an accident, and the large numbers of defective children that would result both immediately and many years later.

Shortly thereafter, the U.S. Congress proceeded to have hearings into the question of nuclear insurance. Senior executives from the largest U.S. insurance companies told the U.S. Congress that it was impossible for them to insure against such an enormous liability as that described in the Brookhaven Report. Insurance companies are required by law to have an actuarial reserve adequate to cover anticipated losses; $7 billion, in 1957, was totally out of sight. Some insurance executives went so far as to tell the Congress that a potential liability of that magnitude should not be permitted to exist.

Congressmen persisted. Couldn't the insurance companies pool their resources? Wouldn't a collective actuarial reserve suffice? The answer was, "No". What about bringing in the European insurance companies? Lloyd's of London, and the rest? Eventually, an international consortium of insurance companies agreed to cover up to $90 million per reactor per accident. No more. So the U.S. Congress passed the Price Anderson Act, limiting the liability of a nuclear reactor owner to $560 million in the event of an accident -- that's about 8 cents on the dollar for a $7 billion accident -- of which $90 million would be covered by private insurance, and the remainder by the government.

Meanwhile, insurance companies throughout the world made it an iron-clad policy never to insure property against nuclear accidents. Too risky. That was the birth of the "nuclear exclusion clause".

Later, in Canada, the Nuclear Liability Act was passed, limiting the liability for a nuclear power plant owner to $75 million -- that's about 1 cent on the dollar for a $7 billion accident -- and totally exempting the manufacturers of reactor components from any liability, even if their components were partly or wholly responsible for the accident.

In 1974, the US Nuclear Regulatory Commission published a 12-volume document that was much more ambitious than the Brookhaven Report. Often referred to as the Reactor Safety Study, it is commonly known as the Rasmussen Report. It estimated potential damages from a reactor accident in excess of $17 billion, while insisting that the probability of such an accident was very low.

During the public hearings of the Ontario Royal Commission on Electric Power Planning, Atomic Energy of Canada Limited used the Rasmussen Report as part of their submission, saying that although the CANDU technology is different, the consequences and the probability of a catastrophic reactor accident would not be much different in Canada.

Thus, 23 years ago, back in 1974, Canadian federal law limited the liability of a nuclear power plant owner to less than 1/2 cent on the dollar. In case of a catastrophic release of radiation, a home worth 100 thousand dollars at the time of the accident would have been compensated at about 440 dollars. If the federal government had decided to make up the difference, the total taxpayer's bill for a $17 billion accident would have come to about 16 billion, 925 million dollars.

Of course, the ratio of coverage to potential loss is very much smaller today, due to the rise in property values and the decline in the value of the dollar over the last quarter of a century.

What Should Parliament Do?

Ideally, CCNR feels that the Nuclear Liability Act should be abolished. Or, at the very least, it should not apply to new nuclear reactors.

The currently proposed amendment to the act -- merely to boost the limit from $75 million to $1 billion, which is already less than the limit of over $12 billion imposed by US law for a similar sort of accident -- is too modest a change.

Let us remove the blanket exemption that is enjoyed by the manufacturers of nuclear components, at least for new components or for new reactors that are not yet built.

Let us legislate that the federal government "shall" -- not "may" -- intervene to settle claims that exceed the statutory limit.

And, in order to protect the public purse, let us raise the liability limit to at least ten billion dollars.

Canadians have already subsidized the nuclear industry to the tune of more than $17 billion. Surely that is enough subsidization for one industry. Why should Canadians also be expected to expose their property and their lives to danger while forfeiting any legal recourse to obtain adequate compensation in the case of an accident?

The industry says the risk is extremely small. But the insurance companies don't buy it, and the nuclear manufacturers don't buy it. Why then should the Canadian population? And why should elected representatives of the people do so?

Life is full of risks. But there is such a thing as just compensation. Why should the Canadian population be deprived of it?

The Canadian Coalition for Nuclear Responsibility is a federally-incorporated not-for-profit organization (founded in 1975, incorporated in 1978).